Rival tablets chase bite of Apple

Samsung and Toshiba have unveiled tablet computers in Berlin, aiming to take market share from Apple's iPad with their lower-priced devices.

Toshiba said at the IFA consumer electronics fair that the recommended price for its Folio 100 tablet in Europe is €399 ($710), undercutting the iPad, which sells for about €499.

Samsung said the price of its Galaxy Tab, which like Toshiba's Folio will debut in Europe next month, will be set by phone operators.

"Looking at the iPad price, alternative tablets should be sold at below US$300 [$414] to be appealing to consumers, unless you have a strong brand to support the premium or a carrier to subsidise the hardware," said Carolina Milanesi, a Gartner research director in Britain.

Apple has sold more than three million iPads since April. The California company is unlikely to face a viable rival in the tablet market before next year and will continue to dominate in 2012, said researcher ISuppli.

Apple will have a 61.7 per cent market share in 2012 in terms of units sold, from 74.1 per cent this year, it estimates. ISuppli expects the tablet PC market to grow fivefold between now and 2012 to 81.6 million units.

"Apple has a huge jump on everybody in terms of the momentum that they've built at this point," said Rhoda Alexander, an analyst at ISuppli in El Segundo, California.

Research In Motion is planning to introduce in November a tablet with a 9.7-inch (24cm) screen and Wi-Fi capability, said two people familiar with the company's plans. Verizon Wireless and Google have discussed a tablet that would run on Android software, and Dell released its US$299.99 Streak five-inch tablet last month.

Sony, the world's third-largest maker of televisions, said yesterday it had not yet decided yet whether to offer its own tablet.

It needed to be a "very appealing product that is going to be widely accepted, as opposed to a me-too product", said Kazuo Hirai, president of Sony's Networked Products & Services Group.

Hirai said 23 companies were planning to bring tablet computers to market, making a price war inevitable.

Samsung and Toshiba said they saw strong demand and expected sizeable market shares in the years ahead.

"Analysts are forecasting maybe 13 million units this year and next year they are forecasting 30 million devices, including the [Galaxy] Tab," said D.J. Lee, Samsung's sales head for mobile communications.

"In my view, the global demand could be even bigger."

Lee said the South Korean company, which expected to sell through major United States, European and Asian carriers, even in China, would co-ordinate pricing with the operators, although "we are working to give people a very attractive and competitive price".

"The Galaxy Tab will be more favourably priced than the iPad, somewhat above 50 per cent, 60 per cent to 70 per cent of what the iPad costs," Niek Jan van Damme, a Deutsche Telekom board member, said in Berlin yesterday.

Deutsche Telekom will offer the Samsung tablet and is in talks with Toshiba. Toshiba, whose 10.1-inch screen tablet will connect to the internet via Wi-Fi networks, could get a regional market share of as much as 20 per cent next year, said Gianluca Dianese, head of marketing for digital products and services in Europe, Africa and the Middle East.

"It's reasonable to expect a 15 per cent to 20 per cent market share by the end of 2011 in Europe."

Deutsche Telekom's van Damme expects the two companies' products to be formidable competition for Apple.

"It's not just a question of quality and functionality, it's also a matter of price, of value for money," he said. "Apple has a premium product, but also a premium price. There will be more customers who can't necessarily afford that. Competition will ramp up."

While price may help some manufacturers to grab market share, ISuppli's Alexander warned it might backfire if profit margins were not high enough to keep pace with technological advances.

"If you aren't getting the profit margin on that product, you're going to have trouble keeping ahead in the leapfrog game which is part of this business: someone comes up behind you, jumps over what you've done and then you need to jump over them," Alexander said.

The greatest challenge for the "me-too" manufacturers will be marrying the content, operating system, touch technology and the various hardware components. Many will be picking from a pool of commonly available applications, as opposed to Apple's approach of tailoring applications specifically to the device.

Gartner's Milanesi said to avoid drastic price cuts, tablet makers might have to differentiate their products, especially as many work with Google's Android as their operating system.

"To be appealing to consumers, tablets should be sold at below US$300."

- BLOOMBERG